Policy Issuance, Group Policy

Offer and Acceptance
The offer may be made by the applicant signing the application, paying the first premium and, if necessary, submitting to physical examination. Policy Issuance, as applied for, constitutes acceptance by the company. Or the offer may be made by the company when no premium payment is submitted with the application. Premium payment on the offered policy then constitutes acceptance by the applicant.

Accidental Death Benefit
An extra death benefit amount that is paid out in addition to the face amount of the policy if the insured dies as the result of an accident. It cost extra to get this benefit, and usually cannot exceed $250,000 to $300,000, and cannot exceed more than the face amount of the policy.

Backdating
A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age at issue lower than it actually was in order to get lower premium. State laws often limit to six months the time to which policies can be backdated.

Contestable Clause
A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested. Example: Suicide.

Contingent Beneficiary
A person or persons named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.

Convertible (conversion)
A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.

Group Policy
A single policy which has been issued to a group or association, whereby members of the group can apply for coverage under the group policy.
Quite often you will find employers and associations may offer a long term care insurance policy to their employees in the form of a group long term care insurance policy.
If you are considering purchasing a group policy you should compare the level of protection afforded that policy versus what level of protection is guaranteed in a comparable individual policy. Your long term care insurance policy should also clearly state whether it is an individual or group policy.

Incontestable Clause
A clause in a policy providing that a policy has been in effect for a given length of time (two or three years), the insurer shall not be able to contest the statements contained in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause.

Insurance Policy
The printed form which serves as the contract between an insurer and an insured.

Lapsed Policy
A Insurance policy which has been allowed to expire because of nonpayment of premiums. In a cash value life insurance policy such as Whole Life or Universal Life the policy could expire because the cash value account reached a zero balance and no premium payments are being made to replenish it.

Not Taken
Policies applied for and issued but rejected by the proposed owner and not paid for.

Policy Fee
There are two calculations to determine the premium for term insurance. The Policy Fee which is a flat fee added to each policy and the rate per thousand times the number of thousands of death benefit. The policy fee is usually the same for all ages and amounts.

Preauthorized Check Plan
A premium-paying arrangement by which the policy owner authorizes the insurer to draft money from his or her bank account for the payments. This is usually done on a monthly basis.

Primary Beneficiary
The beneficiary named as first in line to receive proceeds or benefits from a policy when they become due.

Provisions
Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.

Replacement
A new policy written to take the place of one currently in force.